In May, we looked at the “Delay and Disruption Protocol”, released by the Society of Construction Law, concentrating on programmes, float and extension of time. In this article, we continue our examination. The writer’s comments are given in parentheses.

Concurrent delay

The protocol emphasises that, where contractor’s own delay runs concurrently with delays caused by the client, this is not a valid reason for refusing an extension of time. (This is a welcome clarification, and discourages the common attitude among clients and main contractors of “The information may well have been late, but you were not ready”).

Mitigation

Although the contractor has a duty under common law to mitigate the effect of client’s defaults, this should not involve the contractor expending additional resources or working longer hours, unless the conditions of contract expressly state otherwise. (This confirms my own advice that no contractor should expend significant costs on “special measures” to reduce delays by others, unless he has first negotiated an agreement for reimbursement).

Variations

The protocol recommends pre-agreement of the price and effect of individual variations. This includes direct cost, extension of time and any loss and expense. (This approach is increasingly found in modern contracts. Unfortunately, the time scales are usually inadequate, and often made a “condition precedent” to reimbursement. This places great onus and risk on the contractor). Encouragement is also given to the wider inclusion in contracts of a provision for effect of variations on non-varied works to be taken into account. (This is already found in Dom/1, and sub-contractors should take the imitative in securing this benefit).

Prolongation

The protocol makes clear that, unless the contract specifically provides otherwise, financial compensation for prolongation must be on the basis of the loss and/or expense actually incurred by the contractor. The only exception may be that caused by variations (see above). The contractor’s tender allowances are not to be used, and their adequacy or otherwise is irrelevant. (This is welcome endorsement of views expressed in leading text books, and may help claimants in overcoming the misconceived attitudes shown by many clients and main contractors in responding to prolongation claims. The claimant is entitled, under common law, to be put back into the position in which he would have been had the event or breach not occurred. Clearly, this can only be achieved by reference to actual costs properly incurred and evidenced).

Concurrency in prolongation

Where delays due to the client and the contractor run side by side, then the protocol advises that costs should only be payable if the claimant is able to separate the costs caused by the former. If the costs would have occurred in any case, then they do not become reimbursable just because a client’s delay event intervenes. (This makes good sense, and claimants should analyse the delays in detail, in order to ensure they can comply).

Time scale of prolongation costs

The protocol emphasises that costs of prolongation should be valued at the times when actual compensable delay occurred, not at the tail end over-run. (Many clients insist that the costs should be those incurred during the eventual over-run period, when the contractor’s resources have often been reduced in line with the remaining works. This approach has been very unfair to the contractor. The protocol’s guidance is therefore very welcome).

Global claims

The protocol frowns on global claims, and insists that a contractor who has kept good records should be able to show linkage between the various events and the resultant loss and expense. The occasional exception may be where the combination of the events make it impossible to comply. In that case, the contractor should identify and quantify those events where cause and effect is possible, and deal with the remainder on a composite basis. ( This advice is of little help to the sub-contractor in a typical disruption scenario. Disturbance of progress does not usually come from a small number of major events, but from a multitude of minor preventions. This is often played out in the absence of any overall programme from the main contractor, so that progress degenerates into an ad hoc search for work faces on a daily basis. The result is overall impact on hourly productivity of labour. Those clients and main contractors who insist that disruption must be proved by daywork sheets, and evidence of standing time are, no doubt deliberately, missing the point).

Conclusion

In the next article, we will deal with head office overheads and disruption. Meanwhile, the advice must be to submit prompt notices and keep first class records.

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John Russell

Construction Contracts & Training Consultants (Established 1984)

Cheshire CW4 7DP Tel : 07770 986444

Email : swsubbie@globalnet.co.uk Website: www.jrconsultant.co.uk